Representative Ron Paul sees himself as an independent thinker -- not afraid to confront the conventional wisdom, whether in the form of Federal Reserve Chairman Ben Bernanke or mainstream views within the Republican Party. As I have written elsewhere recently, we should take Mr. Paul seriously -- and not simply dismiss his proposals out of hand.
However, Mr. Paul's current proposals for the federal budget can only be described as fiscally irresponsible. This is completely at odds with his more general stated principles (including in the hearing with Mr. Bernanke this morning), including his well-articulated concern about inflation.
According to the Committee for a Responsible Federal Budget (CRFB), Ron Paul's proposals would -- even under the most optimistic scenario -- leave federal debt roughly where it is now, i.e., at an elevated and dangerous level relative to the size of our economy (see pp. 19-24 of the CRFB report). More realistically, however, we should use the CRFB's high-debt scenario to evaluate all politicians -- reflecting the fact that not everything in the world economy will prove smooth sailing over the next decade.
Under this scenario, Mr. Paul's proposals would increase debt to over 90 percent of GDP -- roughly the same level currently seen in Italy and other troubled European countries.
I understand that other Republican presidential candidates are even more irresponsible than Mr. Paul (including, most spectacularly, Newt Gingrich). I will have more to say about this tomorrow.
But why does Mr. Paul -- an iconoclast of the right and a person who sees himself as a "fiscal conservative" -- feels comfortable putting forward proposals that would likely boost our national debt by so much?
Simon Johnson is the co-author of White House Burning: The Founding Fathers, Our National Debt, and Why It Matters To You, available from April 3rd. This post is cross-posted from The Baseline Scenario.